Guest Comment | Opinion Page Writers’ Housing ‘Solutions’ Would Only Increase Debt – Santa Cruz Sentinel
By Tereza Coraggio
In response to various guest editorials and comments, this continues my theme in “Santa Cruz hates landlords” to show that the authors’ solutions will only lead to greater debt and the division of SC into laptop workers luxury homes renting to hedge fund owners and those afraid of being evicted from subsidized housing if they make money. Is this what we want?
Here’s the data in a nutshell: California median selling price of $900,000 requiring an annual income of $180,000. San Jose median price $1.7 million at 5.78% interest requiring $9,000/month. Santa Cruz/Aptos median price $1.5 million with offers 19% above asking price. California real estate bought by hedge funds so far = $77 billion. California is the second lowest nationwide property (mortgages, not even homes) at 56%; 180,000 new homes a year are needed to meet demand, even though birth rates are falling. In LA, “67% of all rental units and 74% of building vacancies are owned by investment vehicles, not human owners.”
What is an investment vehicle? It’s the money the bankers took from your parents and grandparents for mortgages they came up with. Now that they can no longer raise house prices by lowering interest rates, their goal is to drop the pretense and own the houses. Money is not an object.
The current shakedown raises interest rates after variable mortgages drove the price up. Since we are bidding against each other based on our maximum debt, a variable rate never helps homeowners, only banks. The same goes for the variable city loans and interest swap derivatives that bankrupted Detroit – I’d be surprised if Santa Cruz didn’t have that ticking time bomb too.
Repealing Proposition 13’s “unjust inheritance” so that homes reflect their speculative value would make median property taxes $15,000/year. The empty house tax would charge $6,000 to anyone who left, say, to care for elderly parents or hung on until they could retire. Will the deeded homes sold go to hard-working SC families? Not on your life. Another boon for robber baron investors.
Opinion page author Fred Keeley wants 40% of California’s $97 billion surplus to be spent on building housing for low-income people. Mark Primack wants all new homes to be future duplexes so mortgages can hit four incomes instead of two. The two-part Sentinel op-ed on housing affordability says Santa Cruz is obligated to build 3,400 “housing units” this decade and the state will provide $1 billion in down payment loans and 20% for second mortgages to further increase our indebtedness. Will it help us compete with hedge funds or bid against each other?
During this time, we are housing 18,000 students and thousands more are planned, many of whom will want to stay. Keith McHenry says the city should be “ready for hundreds more people who will become homeless and seek a safe place to live.” He says homeless people are unhappy with their homes, so city staff salaries should be allocated, as $73 million is only a fraction of what goes to ‘poverty pimps’ in celluloid avatar” of the town hall.
Here is the ONLY real solution: take away from the bankers the power to conjure up money out of thin air and make it the exclusive right of the government. Ask the local government to issue mortgages in a local currency that has a high exchange rate against the dollar, driving out speculative investors. Pricing rents in local currency and taxing their extraction in dollars, driving out non-local landlords. Use mortgage proceeds to give local social security and retirement savings a high return. Start with fixed mortgages at 3% interest, but increase them over time to bring home prices down.
We’re not safer with more debt for less home and we don’t need ‘awake guilt’ to say we owe the banks AND everyone else so they can have the same to ours. costs.
Tereza Coraggio is a 40-year Santa Cruz resident, author of How to Dismantle an Empire and creator of Third Paradigm on YouTube and Substack.